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Financial Economic Literacy for Managers Assignment

   

Added on  2020-06-06

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Financial and EconomicLiteracy for Managers

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Questions..........................................................................................................................................11. Applying business economics concepts and theories of market structure, multinationalcorporations, small and medium enterprises and growth strategy.........................................12. Concepts of demand, supply and monetary policy of Bank of England to UK Housingmarket.....................................................................................................................................33. Macroeconomic indicators in UK over past years.............................................................44. Applying concept of leverage and current account management in taking decisions........55. A) Financial ratios of Tesco Plc ........................................................................................6B) Present value......................................................................................................................7C) Net Present Value (NPV)..................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONEconomic theories are quite important for assessing demand and supply. Present reportdiscusses about various theories and concepts of economics. The UK local High street shopnamed Conron shop situated in Marylebone is discussed. Moreover, financial ratios arecalculated for Tesco Plc and investment appraisal technique such as NPV is highlighted in thereport. Thus, economic concepts are quite useful for business and nation as well. Questions1. Applying business economics concepts and theories of market structure, multinationalcorporations, small and medium enterprises and growth strategyMarket structureMarket is place where buyers and sellers meet in order to exchange goods and services bypaying out price for the same. Market structure comprises various markets such as oligopoly,perfect competitive market, monopoly and monopolistic competition. These are the four marketstructure where customers and sellers meet for exchanging goods by paying particular price.Each of these market structures have advantages and limitations (GAUDECKER and VON,2015). In context of these two theories such as modern and neoclassical theory can be explainedin this economic concept. Modern theory states that there are various macroeconomic aspects which have effect oneconomy in the best possible manner. The elements are customer needs and preferences, incomeand employment and most important among all these is purchasing power of customers andconsumer behaviour while purchasing goods. High street local shop named Conron shop situatedin Marylebone is also affected by above stated elements quite effectually. On the other hand,neoclassical theory states that demand and supply of commodities are mainly affected byconsumer demands and it depends on utility which is derived by paying money and as such,customer satisfaction is accomplished (Zietlow and et.al, 2018). Multinational Corporations (MNC)MNC conducts business in at least one country apart from its domestic business branch.This implies that MNC has its branches in domestically and internationally. This directly helpcountry in achieving higher growth and as such, benefits are provided to businesses and country1

in the best possible manner. In this context, various economic theories can be derived such asVernon's Theory of Product Life cycle and Dunning's Theory of Eclectic Paradigm. It can bederived from the first theory as stated by Raymond Vernon that product undergoes differentstages such as inception, growth, maturity and decline stages. This implies that commodityproduced goes in the market and as such, demand and supply that are market forces affectscommodity quite adversely. Moreover, commodity is provided to international customers andmainly capital goods are imparted which are purchased by rich class people (Allgood andWalstad, 2016). Next is Dunning theory states that MNC firms try to attain more FDI (Foreign DirectInvestment) to fulfil requirements of customers and as such, operations are expanded with muchease. This theory explains that company wishes to expand its reach to more markets and as such,investment is needed to carry out tasks in the best possible manner.Small and Medium Enterprises (SME)SME are important to UK economy in injecting overall growth in effective way. SME'sare crucial for the nation in increasing GDP (Gross Domestic Product) with much ease.Economic growth is accomplished in a better way as more and more SME are established andinjects positive growth quite effectually. In relation to this, two theories can be explained in thecontext of SME. They are Nelson and Winter Theory of Economic change and other theory isOrganisational Equilibrium by Barnard-Simon. The theory with context to Economic change states that effective and better strategies areimplemented by SME in order to have greater market share. This is justified as size of SME aresmaller and as such, well-structured strategies are required to be implemented to outreach rivalsin the best possible manner (Finke, Howe and Huston, 2016). This will help company to enhanceits value in the market and moreover, customer base will be broadened with much ease. Thus,competitive moves are required for strengthening organisation viability in effective manner. Nexttheory consists of Organisational Equilibrium by Barnard-Simon which focuses on the fact thatemployees should be retained by SME as they are small in numbers and they are referred to asparticipants. This means that organisation should retain workers as they provide individualcontributions and company pays for the same. Thus, employees are major concern for SME's. 2

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